Friday, 21 December 2012

Here is a list of 3 liquidations that we are doing in the first couple of weeks of January giving the directors a new start in 2013. Businesses sometimes do not succeed but that does not mean that another venture will as well.

In many cases, which we deal with, the directors have gone on to full employment doing something similar without the stress of a struggling company.

Route 1 Garden and Home Limited

Meeting of the Creditors of the above named Company will be held at The Hubworking Centre, 5 Wormwood Street, London, EC2M 1RQ on 11 January 2013 at 11.15 am

Wednesday, 19 December 2012

The construction industry has always been exposed to downturns due to the time lag between inception and completion of projects and the need for working capital. Also many are reliant on public sector contracts. 2012 started as a bad year and the fall in output in construction was to blamed for the negative GDP figures.

Despite the recent collapses of Speymill's contracting arm and Swift Horsman which has resulted in 600 redundancies there is more optimism about 2013. This is mainly due to the hope of more public sector contracts.

The construction industry is a vital component of the UK economy and it directly and indirectly employees many people and it should be preserved where possible.

So what can be done for struggling construction businesses?

In construction the smallest mistake culminating in a cost overrun could be critical. A business may no longer be viable going forward soso liquidation might be the only option.
If a business is fundamentally viable then a company voluntary arrangement could be the answer
One particular building company we rescued had an overdraft of £150k with RBS. This bank is known for blocking pre-pack administrations where the business is sold to the encumbents. So after a meeting with KSA Group a rescue plan was put together.

Tuesday, 18 December 2012

The consultation period required for large scale redundancies is to be changed from 90 days to 45 days under new rules being introduced in April 2013. This will bring the rules into line with other EU countries. This will only apply where more than 100 people are being made redundant. Currently if you are to make redundant less than 100 people then the consultation period is only 30 days. Less than 20 people and there is no need for any consultation period.

The move from 90 days to 45 days in bigger businesses has been broadly welcomed by restructuring experts as companies in difficulty need to be turned around quickly and any delay can exacerbate the problem. It is often the case that the required consultation is carried out before the 90 days are up anyhow i.e. the consultation does not have to take 90 days prior to making redundancies.

Whilst there is a duty to consult, an employer is not prevented from making redundancies if after meaningful consultation has taken place, no agreement can be reached.

How this will actually impact the world of restructuring and saving companies it remains to be seen but it could help focus minds to effect a rapid turnaround of a distressed business.

The administrators at Deloitte have confirmed that all the UK Comet stores are to close tomorrow just days before Christmas. This marks the end of the chain on the High Street. It is possible that the brand may continue online as the website did a great deal of business. Appliancesonline.co.uk has expressed an interest in the website and Currys may buy a couple of the stores at the 11th hour. Dixons has hired 1000 staff from Comet in order to help process the Christmas rush.

According to a report by the administrators, the treasury is a loser in all this as the company owes some £26m to HMRC. In addition, the company has unsecured creditors which included ITV and Google, which are owed £1.2 million and £602,000 respectively for unpaid advertising bills. There are also £4.2m worth of unredeemed gift cards.

However, an estimated £40 million of payments will be made to suppliers and £2.1 million of holiday and back pay owed to staff will be paid in full. However any redundancy claims will need to be met by the government for all 6000 staff. This is likely to amount to a further £25m.

Friday, 14 December 2012

If you have a client call you up in 2013 saying they are really struggling and have just received a winding up petition what will you do?

a) Say; "I am sorry to hear of their situation but we are not insolvency practitioners so can't really help"

b) Say; "please pay my bill first and then I can talk to you."

c) Request an insolvency toolkit from KSA group, if you haven't already got one, and discover how you can stop your client and perhaps others going into liquidation and not paying your bill.

C is the right answer!

Our insolvency toolkit will demystify the jargon and help you understand all the options open to a struggling business, which, by the way, is not just administration or liquidation!

The toolkit will also show how you can earn EXTRA income from a client who is being rescued by us by providing services that are essential in any turnaround situation.

If you need urgent advice we will talk to all advisors for no charge. To request a toolkit then please send an email to robertm@ksagroup.co.uk or for urgent advice on insolvency issues then call us on 0800 9700539 or 07974 086779

Thursday, 13 December 2012

HMV Group has announced that it may breach its banking covenants by early next year. Consequently the shares fell nearly 40% on the news. The company has seen a 13.5% reduction in like for like sales in the 26 weeks to the end of October and net debt has risen to £176m. The company has undergone a number of new initiates to try and boost sales such as showcasing technology in a number of revamped stores.

So far the banks have been supportive while so many commentators have predicted its demise. See our earlier blogs on

The company is still hanging on to their credit. It is interesting that Comet went into administration despite having stable sales but a huge debt whereas HMV's debt is growing and sales have been sliding for the last 2 years. One reason is because HMV occupies a unique place in the market and it does not have any direct competitors on the High Street. There also appears to be a plan in place to turn the business around albiet slowly. They have sold off the live music businesses to try and trim debts.

Previously HMV have not ruled out the use of a company voluntary arrangement or CVA to try and rescue the business. However in the recent statement they have said they do not wish to close down any stores which a CVA can do.

Wednesday, 12 December 2012

Leading insolvency firm Begbies Traynor reports sales down 11.2% in its first half and net profits fell too.

Pre-tax profit reduced to £2m from £3.4m before.

Commenting on the results, Executive Chairman Ric Traynor said:
"Challenging market conditions have persisted with lower levels of activity in
the insolvency market over the summer months."

"Overall, this led to a
group performance with lower revenues and profits than the comparative period.
In spite of this, the business remained profitable and continues to
generate good operating margins through on-going management of the group's cost
base."

Begbies said it expects UK insolvencies to remain broadly stable. With sales down 11% in the first half it expects a rise in revenues in half 2 to deliver profits in line with forecast.

Looking ahead the group added: "We anticipate an improvement in activity
in the second half of the financial year during the traditionally busier winter
months. Given this, we currently anticipate that the group's performance for the
year as a whole will be broadly in line with last year."

Net debt stood
at £18.3m from £20.1m in April this year and down from £27.3m the same time last
year.

Tuesday, 11 December 2012

Shoe Zone, the owner of Stead and Simpson, the retailer with 227 stores around the UK has announced that it is going to close down 90 of its Stead and Simpson stores by winding up the company, Tyler Ltd, that operates them. It is expected that there will be some 500 job losses. The company announced the move as it needs to increase its profitability so it needed to cut back its loss making stores. Tyler ltd will probably be put into voluntary liquidation but it is interesting to see that according to credit checks it has a rating or 93 out of a 100.....

The landlords may have guarantees from the parent company Shoe Zone but that is not necessarily certain.

Monday, 10 December 2012

It has been reported in some of the car dealer press that Drive Assist, the UK’s fifth largest accident management company, with a £100m turnover has gone into administration. The press have been contacted by a number of car repairers and others that the business was "going into administration" No one is answering the phone at the company and there has been no official announcement so it is not certain what is happening. Also a number of the dealers websites are down such as Nottingham Autopark. As such it appears something is going on.

It is possible that the firm is trying to arrange a pre pack administration to try and ensure business continuity or are in talks with the banks to try and renegotiate the debts. The balance sheet of the company is showing negative £325m at the last reported accounts in mid 2011.

update: A number of employees have emailed me to say that they have been made redundant following Drive Assist going into administration and see comment below. The company's website still has no announcement which is unusual. We understand that Zolfo Cooper have been appointed the administrators.

Friday, 7 December 2012

With the banks no longer lending money in the same volumes as in the past there are now an increasing number of new ways that businesses can raise finance. Some methods of providing finance have been around for a while such as single invoice discounting ( where a provider will advance money on the back of just one, usually large, invoice to a good credit risk debtor ) but new methods are gaining in popularity as bank lending decreases. Asset based lending has grown some 100% since 2007.

A new form of finance has come to the UK from the US which is being called credit card factoring or credit card merchant advances. This is simply an advance on money that the company is expected to take from credit and debit cards in the future. The provider just needs some historical financial information and some references and then they can advance the money. This is set at 1/12th of the takings but could still be invaluable if a pressing bill to HMRC needs to be paid. The money is then recouped for a set fee from the credit card takings. See our page on credit card merchant advances for more details.

Thursday, 6 December 2012

With most businesses shutting from 21st of December probably until 2nd or 7th January, it is likely that there will be a sharp freeze in payments to suppliers and therefore creditors. It is likely that debtor days are going to rise sharply. For many businesses this will be the biggest recent test of all.

So look now at your cashflow, who has promised to pay your business this month? I suggest you ask if they can accelerate this payment so you receive it before 21st of December. Make sure someone is on the phone to all debtors now asking for payments. The recent cold spell is forecast to get worse so you don't want it to become an excuse for your customers not paying.

Perhaps plan to go into the office and see if there any payments that have been sent by cheque just before Christmas, get them banked. On the 2nd or 7th January be FIRST on the phones to chase payments in.

This may seem tedious and unnecessary, BUT it is your business's lifeblood we are talking about.

Get the debtors to pay you and keep your creditors informed and paid when you can.

If you have a larger business then it may pay to get a specialist debt collection agency on board. They are not simply more aggressive but they are effective because they do not have the emotional attachment to the customer and they can be persuasive without compromising your relationships.

All PAYE returns will have to be done online by October 2013 with many companies starting to do it from April 2013.

The biggest change is that all employers will have to file pay and tax details for their employees online when wages are paid – rather than at the end of the tax year. The way it currently works the HMRC only knows the true liabilities on the 19th of May following the end of the tax year when the P35 is filed.

Failure to file these returns online in "real time" will result in fines from £2000 for smaller businesses and much more for large businesses. HMRC are likely to know about businesses that are late with payments at a very early stage. This means that companies need to be ready to talk to HMRC earlier.

If your business is having problems paying PAYE then it may be that a "Time to Pay" arrangement can be agreed with HMRC to allow the paying off of tax over a short time scale of say 6-12 months. However, it is important not to ignore any build up of tax debts.

Wednesday, 5 December 2012

A report by the lawyers, Allen & Overy, said rules forcing banks to hold more capital are already reducing credit for small companies, while proposals to increase regulation on non-bank lenders “raise serious questions” about whether they will be able to meet the needs of small business.

The non-bank lenders being asset based lending, factoring and invoice discounting which have been in the press recently due to controversial "exit fees" that are paid when a business goes into administration.

Allen & Overy also said that Europe is “far behind” the US in the use of non-bank forms of finance for small businesses. For instance credit card or merchant finance has been available for years in the US.

It warned of a risk that regulations would “dry up” opportunities to bring new sources of capital into play in the SME market, such as pension funds.

Of course in the end it is all about having sufficient working capital. One way that a business can get back working capital, especially if they are insolvent is by entering a company voluntary arrangement. This means that their debts can be spread out over 3-5 years. But here is the best bit; They can write off "upto" 70% of their unsecured debts. However, the business does need to be insolvent and anyone thinking of going down this route needs to take professional advice as they will need the support of their creditors.

Monday, 3 December 2012

The TMA event held last week in Bristol with Clarke Willmott was a success with some very interesting speakers.

We heard from Philip Winterbourne, the Partner at Clarke Willmott LLP who told us how they saw the year 2012. Principal observations were that the bank's liquidity rules and their fear of calling in loans that may have had interest rate swapping products attached them had meant that fewer companies were going into administration.

Nic Hanson from Close Brothers Invoice Finance pointed out how the market for factoring and invoice finance was growing all the time and many businesses had taken on this form of finance. Particularly because again due to liquidity rules Invoice finance meant they didn't have to hold as much capital.

Finally Keith Steven of KSA Group explained why "Zombie companies" existed and what the future held for them. The biggest challenge they may face could be with Real Time Information or (RTI) which will mean that companies can no longer hide their PAYE liabilities until the following year.

See his presentation below

The event was well attended with representatives from Russams GMS Interim managers, KPMG and Accountingweb.co.uk coming along to enjoy the networking and hospitality that was kindly put on and hosted by Clarke Willmott. KSA Group helped sponsor the event.

A company was being threatened distraint action by HMRC over a £183k debt in December 2011.

Although the company had a turnover of only £280k we managed to rescue it and get a CVA approved by HMRC and pay 42p in the £1 dividend. Company has restructured, cut its costs, and continues to trade providing web services to its clients.

Our Blog is to inform the business world what fantastic tools CompanyRescue can provide for restructuring viable companies. Our experts use CVA's, CVA and Hive Downs, pre-pack Administrations and liquidation to restructure companies. And occasionally we will announce insolvency notices, blog some anecdotes, opinions, comments on the industry, funny stories and actual KSA Group case studies. We welcome your contributions, comments and input so please click subscribe /RSS to receive updates.....or comment on our blog contents!

Our web sites - try them for help in your area of interest

Free CVA Guide

Get our Complete Experts Guide to Company Voluntary Arrangements. If you are looking at restructuring options for your company or that of a client, our latest version of this 90 page guide to CVA is the only guide you need (its the only one available!) Click on the linkFAQ's, flowcharts, guides, case studies, tips of the trade and case law: all in one PDF thats easy to use or email.

floating widget

Disclaimer

The information contained in this Blog (the "Blog") is intended solely to provide general guidance on matters of interest for the personal use of the reader, who accepts full responsibility for its use. The application and impact of laws can vary widely based on the specific facts involved. Given the changing nature of laws, rules and regulations, and the inherent hazards of electronic communication, there may be delays, omissions or inaccuracies in information contained in this Blog. Accordingly, the information on this Blog is provided with the understanding that the authors and publishers are not herein engaged in rendering professional advice or services. As such, it should not be used as a substitute for consultation with professional and competent advisers. Before making any decision or taking any action, you should consult a professional adviser.

While we have made every attempt to ensure that the information contained in this Blog has been obtained from reliable sources, KSA Group is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information in this Blog is provided "as is", with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. Nothing herein shall to any extent substitute for the independent investigations and the sound technical and business judgment of the reader. In no event will KSA Group, or its directors, employees or agents, be liable to you or anyone else for any decision made or action taken in reliance on the information in this Blog or for any consequential, special or similar damages, even if advised of the possibility of such damages.

Links to Related Internet Sites

Certain links in this Blog connect to third party web sites. KSA Group does not accept any responsibility for, nor makes any representations as to the accuracy of, any content in such third party web sites.

Third Party Comments

Third parties may submit comments for publication on the Blog. Any such comments are submitted on the basis that KSA Group will review and may edit such comments, and that not all submissions will be published. Any third party comments published on the Blog (whether edited or not) are third party information for which KSA Group takes no responsibility and disclaims all liability, and the above disclaimer applies to any such third party comments.

Privacy Statement

If and to the extent that you submit any personal data (such as your name and email address) to KSA Group through this Blog, including by email to the Blog manager, KSA Group (as data controller) confirms that it will only use any such personal data for the purposes for which you have provided such data.

Copyright

The copyright in the text, podcasts, PowerPoint slides, layout and any other materials on this Blog (other than any third party comments) is owned by KSA Group Ltd. All rights are reserved.
If you wish to use or copy any of the text or other materials on this Blog (or any extracts from the same), you must first contact KSA Group for copyright permission in relation to the proposed use. In addition, any use of text or other materials on this Blog (or any extracts from the same) in published materials must identify the KSA Group materials involved and reference the KSA Group author's name.